HKSAR v. Lee Wai Ki, Jeremy and Others

HCMA001045/2000

HCMA 1045/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 1045 OF 2000

(ON APPEAL FROM TMCC 1443/2000)

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Coram: Hon Lugar-Mawson J in Court

Date of Hearing: 31 May 2001

Date of Judgment: 20 June 2001

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J U D G M E N T

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1.The Appellants and three other men appeared before Mr. D. I. Thomas, Permanent Magistrate sitting at the Tuen Mun Magistracy, on a joint charge of conspiracy to defraud. One defendant pleaded guilty to the charge and one was found not guilty after trial, the Appellants, who were the 2nd, 3rd & 5th defendants at trial, were found guilty. The 1st and 2nd Appellants were each fined $10,000 and the 3rd Appellant was fined $7,500. The date of conviction and sentence was 30 August 2000.

2.The Appellants now appeal against their convictions. Mr. John Dunn represents the 1st and 2nd Appellants. The 3rd Appellant is unrepresented, I refused his application for an adjournment to obtain legal representation as I considered that he had had ample time to obtain this. He had filed his notice of appeal on 12 September 2000.

Facts

3.The Appellants were either employed as technicians by MateriaLab Ltd, a testing laboratory, or had been seconded by their employers to work for MateriaLab. The Government's Housing Department had a contract with that firm for it to carry out sampling and testing of concrete delivered to the Department's building sites in mobile concrete mixers. The contract provided that MateriaLab was to adhere to the detailed provisions of Volume 1 of the Construction Standard for Testing Concrete, commonly known as 'CS1'. CS1 lays down detailed specific instructions for the frequency of testing of fresh concrete and the method by which the tests are carried out. MateriaLab also issued its staff with internal manuals, which repeated the contents of CS1 with certain variations.

4.There are two kinds of tests: a 'slump test' and a 'compression test'. The slump test is designed to ensure that the consistency of the concrete mix is within acceptable parameters. One of the Appellants was required to be present in order to take samples as concrete was discharged from the mixer. Samples were taken from the 1st, 3rd, 5th & 6th pouring from the mixer, loaded onto a wheelbarrow and taken to Materialab's site office; there they were poured into two steel moulds to set. Details of the sample would be recorded in a logbook, which was kept in the site office. The technician pouring the concrete into the moulds would affix a MateriaLab label to each cube; this had various data fields printed on it. The cubes would then be left to set. Once set, the concrete cubes would be removed from the moulds and various data written directly on to them.

5.The cubes were then sent to MateriaLab's head office where the compression test was carried out. The cubes produced in the course of the slump tests were compressed to destruction 7 days after being cast - '7-day cubes'. Cubes cast from samples of concrete taken from the 1st pouring from the mixer were allowed to reach full strength at 28 days after casting before being compressed - '28-day cubes'. The purpose of these tests was to verify the strength of the concrete.

6.At MateriaLab's head office, a technician had to complete a document - Form WG-F08. This recorded, among other things, the identity of the site and the concrete sample. The system was designed to identify accurately the concrete from which the sample had been taken and from which each cube had been cast.

7.Because of the requirement for accuracy in the sampling and identification of each cube, MateriaLab prohibited the making of additional cubes. Only sufficient cubes for the testing programme could be made.

8.When interviewed by ICAC officers, the Appellants admitted that from time to time they had made additional sample cubes and had not taken samples in accordance with the standard procedures. In order to produce cubes following nighttime deliveries of concrete, additional cubes were made from earlier daytime deliveries. They would then be marked with false documentation showing that they had been cast from the nighttime deliveries. In this way, the link between the cubes and the source of the samples was broken. If the cube proved to be substandard, easy identification of potentially substandard concrete construction work would be impossible. The Appellants claimed that they had done this in order to complete their work without having to work overtime. They also claimed to be under pressure because of under manning at MateriaLab and the dangers of working at night.

The law of conspiracy

9.Before dealing with the grounds of appeal, is first necessary for me to discuss the nature of the offence of conspiracy to defraud.

10.The common law offence of conspiracy to defraud is expressly preserved by s.159E of the Crimes Ordinance. Academic opinion, discussing the analogous provision in s. 5(2) of the English Criminal Law Act 1977, appears to accept that it remains siu generis from the offence of statutory conspiracy under s.1 of the English Act - s.159A of the Crimes Ordinance.

11.At common law, a conspiracy is defined as an agreement between two or more persons to do an unlawful act, or to do a lawful act by unlawful means: see Mulcahy v R [1868] LR3 HL 306. The offence of conspiracy cannot exist without the agreement, consent or combination of two or more persons.

12.A conspiracy does not end with the making of the agreement, it continues so long as there are two or more parties to it intending to carry out the design: see DPP v Doot [1973] AC. 807, HL.

13.Mens rea is an essential element in common law conspiracy only in that there must be an intention to be a party to an agreement to do an unlawful act. In R v Anderson [19861 AC. 27, HL, Lord Bridge said, at p. 39E:

"But, beyond the mere fact of agreement, the necessary mens rea of the crime is, in my opinion, established if, and only if, it is shown that the accused, when he entered into the agreement, intended to play some part in the agreed course of conduct in furtherance of the criminal purpose which the agreed course of conduct was intended to achieve. Nothing less will suffice; nothing more is required."

14.There is no requirement for the prosecution to prove that any conspirator intended that the criminal offence or offences which will necessarily be committed by one or more of the conspirators if the agreed course of conduct is fully carried out, should in fact be carried out.

15.The defendant's knowledge of the law is immaterial. If what the alleged conspirators agreed to do was, on the facts known to them, an unlawful act, they cannot excuse themselves by saying that, owing to their ignorance of the law, they did not realise that it was a crime. However, if, on the facts known to them, what they agreed to do was lawful, they are not rendered artificially guilty by the existence of other facts, not known to them, giving a different and criminal quality to the act agreed upon: Churchill v Walton [1967] 2 AC. 224, HL.

16.The elements and definition of the offence of conspiracy to defraud has often been the subject of judicial dispute. Of particular difficulty has been the true meaning of 'defraud' or 'intent to defraud'.

17.In Welham v Director of Public Prosecutions [1961] A.C.103, the Appellant had witnessed forged hire-purchase agreements, on the basis of which finance companies advanced sums of money. He was charged with forgery under the now repealed Forgery Act 1913. His defence was that he had no intention of depriving the finance companies by deceit of any economic advantage, his belief being that the only function of the agreements was to enable the companies to circumvent certain credit restrictions. His only purpose was to mislead the authority which might inspect the records and whose duty was to prevent contravention of the credit restrictions. The House of Lords held that there was no warrant for confining the words 'intent to defraud' to an intent to deprive a person by deceit of an economic advantage or to inflict an economic loss upon him, and further that such an intent could exist where there was no other intention than to deceive a person responsible for a public duty into doing something, or failing to do something, which he would not have done, or failed to have done, but for the deceit.

18.Lord Denning, who delivered the leading speech, rejected the argument that an intention to defraud involves an intention to cause economic loss. He referred to opinions of academic lawyers to that effect, and said, at p.131:

"I cannot agree with them on this. If a drug addict forges a doctor's prescription so as to enable him to get drugs from a chemist, he has, I should have thought, an intent to defraud even though he intends to pay the chemist the full price and no one is a penny the worse off."

19.Later, at pp.132-133, Lord Denning referred to a passage in East's Pleas of the Crown 1803 ed. Vol 2 p.852, to the effect that forgery at common law denotes a false making of any written instrument for the purpose of fraud and deceit. He then said, at p.133:

"That was written in 1803, but it has been always accepted as authoritative. It seems to me to provide the key to the cases decided since it was written, as well as those before. The important thing about this definition is that it is not limited to the idea of economic loss, nor to the idea of depriving someone of something of value. It extends generally to the purpose of fraud and deceit. Put shortly,‘with intent to defraud', means with intent to practice a fraud, on someone or other. It need not be anyone in particular. Someone in general will someone. If anyone may be prejudiced in any way by the fraud, that is enough"

20.Lord Radcliffe agreed with Lord Denning's speech, but went on to express his view of the meaning of the words 'intent to defraud', in s.4(1) of the Forgery Act 1913. He rejected the proposition that in ordinary speech 'to defraud' is confined to the idea of depriving a man by deceit of some economic advantage or inflicting upon him some economic loss, and continued, at p.124:

"Has the law ever so confined it? In my opinion there is no warrant for saying that it has. What it has looked for in considering the effect of cheating upon another person and so in defining the criminal intent is the prejudice of that person: what Blackstone (Commentaries,18th ed, vol 4, at p.247) called 'to the prejudice of another man's right' East's Pleas of the Crown (1803), Vol 2, at pp.852, 854, makes the same point in the chapter on Forgery: 'in all cases of forgery', properly so called, it is immaterial whether any person be actually injured or not, provided any may be prejudiced by it."

21.Lord Radcliffe went on to say that the special line of cases, where the person deceived is a public authority or a person holding public office, and there is no intention on the part of the deceiver to inflict upon him any pecuniary or economic harm, shows that such an intention is not necessary to convict a man of an intention to defraud. The remainder of the Appellate Committee agreed with Lord Radcliffe and Lord Denning.

22.In R v Wai Yu-tsang [1992] 1 AC 269 PC (an appeal from the Hong Kong Court of Appeal) the Appellants had been convicted of conspiracy to defraud, the Privy Council after citing the above observations of Lord Radcliffe and Lord Denning in Welham said, at p.276:

"This authority establishes that the expression 'intent to defraud' is not to be given a narrow meaning, involving an intention to cause economic loss to another. In broad terms, it means simply an intention to practise a fraud on another, or an intention to act to the prejudice of another man's right."

23.In R v Scott [1975] A.C. 819 HL, the Appellant had been convicted of conspiracy to defraud, Viscount Dilhorne, delivered the leading speech, he reviewed the authorities, including Welham, and said at p.839:

"I have not the temerity to attempt an exhaustive definition of the meaning of 'defraud.' As I have said, words take colour from the context in which they are used, but the words 'fraudulently' and 'defraud' must ordinarily have a very similar meaning. If, as I think, and as the Criminal Law Revision Committee appears to have thought, 'fraudulently' means 'dishonestly', then 'to defraud' ordinarily means, in my opinion, to deprive a person dishonestly of something which is his or of something to which he is or would or might but for the perpetration of the fraud be entitled."

24.In a brief speech Lord Diplock said, at p.841:

"(2) Where the intended victim of a‘conspiracy to defraud, is a private individual the purpose of the conspirators must be to cause the victim economic loss by depriving him of some property or right, corporeal or incorporeal, to which he is or would or might become entitled....(3) Where the intended victim of a conspiracy to defraud, is a person performing public duties as distinct from a private individual it is sufficient if the purpose is to cause him to act contrary to his public duty..."

25.Of these observations, the Privy Council in Wai Yu-tsang said, at page 277:

"With the greatest respect to Lord Diplock, their Lordships consider this categorisation to be too narrow. In their opinion, in agreement with the approach of Lord Radcliffe in Welham v Director of Public Prosecutions [1961] A.C.103, the cases concerned with persons performing public duties are not to be regarded as a special category in the manner described by Lord Diplock, but rather as exemplifying the general principle that conspiracies to defraud are not restricted to cases of intention to cause the victim economic loss. On the contrary, they are to be understood in the broad sense described by Lord Radcliffe and Lord Denning in Welham v. Director of Public Prosecutions - the view which Viscount Dilhorne favoured in R v Scott [1975] A.C.819, as apparently did the other members of the Appellate Committee who agreed with him in that case (apart, it seems, from Lord Diplock)."

26.Their Lordships views in Wai Yu-tsang appear to cast in doubt the accuracy of our own Court of Appeal's comment made the previous year (1991) in R v Wong Chun-loong [1991] 1 HKCLR 120 at p.123, that:

"To convict of conspiracy to defraud, a jury must be sure that an accused appreciated that the course to which he was lending his agreement would really endanger the economic interests of another."

27.The Privy Council in R v Adams [1995] 2 Cr App R 295 (PC) an appeal from the New Zealand Court of Appeal, held, however, that where an allegation of conspiracy to defraud is based on economic loss, it is necessary for the prosecution to prove that the victim had a right or interest which was capable of being prejudiced either by actual loss or by being put at risk.

28.The word 'dishonestly' is inserted in the definition of the offence of conspiracy to defraud in deference to opinions, mostly obiter, expressed in several cases. In Welham, there is no mention of any need to tell the jury that they must be satisfied that the accused was acting dishonestly. No doubt their Lordships considered it beyond argument that to take the risk of prejudicing another's right intentionally, knowing that there is no right to do so, is dishonest.

29.In their commentary at paragraph 17-61 (p.1602) the editors of Archbold 2001 ed. observe:

"In general, fraudulent conspirators neither desire nor foresee loss or injury to another; the fraud consists in taking the risk of injuring another's right, which the accused know they have no right to take."

30.Relying on these authorities, I take a conspiracy to defraud to be a dishonest agreement by two or more persons to deprive a person of something which is his or to which he is or would or might but for the perpetration of the fraud be entitled (per Viscount Dilhorne in Scott) or to practise a fraud on another, or to act to the prejudice of another's right (per Lords Denning & Radcliffe in Welham).

31.As with any other conspiracy, the agreement may be proved by direct evidence, or by proving circumstances from which the court may presume it: see R v Parsons (1763) 1 W.Bl. 392 & R. v. Murphy (1837) 8 C. & P. 297. Proof of the existence of a conspiracy is generally a matter of inference, deduced from certain criminal acts of the parties accused, done in pursuance of an apparent criminal purpose in common between them: see R. v. Brisac [1803] 4 East 164 at 171, cited with approval in Mulcahy and many other reported decisions. Overt acts, which are proved against some defendants, may be looked at as against all of them, to show the nature and objects of the conspiracy: see R. v. Stapylton, Esdaile and Brown [1857] 8 Cox 69.

32.I turn now to the grounds of appeal. The 3rd Appellant advanced no grounds of appeal of his own at the hearing and relied on Mr Dunn's arguments on behalf of the 1st & 2nd Appellants.

Ground 1

33.Mr Dunn argued that there was insufficient evidence available to the magistrate for him to infer that an agreement existed or was entered into by the 1st & 2nd Appellants and that they were doing no more than following existing slack working practices.

34.At trial, most of the evidence adduced by the Prosecution was admitted under s.65C of the Criminal Procedure Ordinance. The bulk of it comprised the transcripts of videotaped cautioned interviews with the Appellants and it was upon the interviews that the Magistrate relied in finding that there was an agreement.

35.None of the Appellants gave or called evidence on their own behalf. It was agreed that all were of good character.

36.In his second interview the 1st Appellant said at item 364:

"Well, ... normally, er, because to avoid, we ourselves sometimes would, sometimes would have it made in advance, because to avoid the colleagues working the night shift, the colleagues working the night shift having to come down specially for casting bricks. Well, only let him do the slump and not necessary to go out and get the stuff, because at night we would get spotted generally when going out to take the stuff."

37.At item 366 he said:

"..well, er, if we can't see at night, besides, er, basically at night it's quite dangerous for us to go out to take, take, take this piece of brick, because anything dropping from above can't be seen."

38.At item 368 he said:

"I, huh, well, so usually we would do it earlier."

39.In his third interview, the 1st Appellant confirmed that cubes were made in advance to assist those working at night. He said that there others were involved. He was not personally involved in making the cubes or carrying out the slump test, he was responsible for recording the transactions in the logbook.

40.In his second interview, the 2nd Appellant said, at item 46:

"But it, er, has nothing to do with, er, the substitutes for the contractor, or any elements of corruption, but, er, many colleagues, for the sake of convenience, wanted to get off duty early and came ... probably (they) were short of 2, er, 4 cubes, then (they) made them all in one go. Probably 2 were, er, made instantly on the spot, that is, it was from that truck, then 2 cubes probably had not reached the metre for the cube to be made, they just made them first."

41.At item 79 it was pointed out to him that he could not truthfully reflect whether the concrete in the concrete mixers was up the requirement or not. At items 80 to 90 (even numbers only) he said:

"...I understand this point but because, er, I couldn't put up with that pressure."

"Er, it's the pressure when I handled the six technicians, because for most of the time they said, er, (they) wanted to leave early."

"Er, got something to do."

"Also that they didn't want us to have too much burden."

"I make the cubes for you first..."

"... and you let me go. That was the condition in exchange."

42.At item 190 he agreed when it was put to him that he had said that he was afraid '...the brothers in the night' could only manage to do the slump test, that there was no need to make the cubes, and that he made it first. He also went on to say that the cubes were made around 6 p.m. and that at most six cubes a day were made.

43.In his second interview, the 3rd Appellant said at item 80:

"Yeah! The one or two who worked overtime, whoever left; well, also for the convenience sake, well, our colleagues, er, might, er, make (them), er, as well, might 'make perhaps, six cubes or four cubes or two cubes at one time."

44.When asked whether that was done to save time, he said that it was for the sake of convenience and because of laziness. He was asked if he had made cubes in that way and he said that he had.

45.Commenting on this evidence the magistrate said in his statement of findings at p. 731 of the appeal bundle:

"...it is clear that there was no formal agreement to carry on this practice of making extra cubes...indeed it appears that it may have been a practice of some standing. However, it is clear that there was a single agreement and that each of the Appellants...made himself a party to that single agreement. It is clear that not every appellant and defendant joined the conspiracy at the same time. It is clear, however, that it was the same conspiracy which each of the appellants and defendants was joining. The fact that not every conspirator did every action involved in a criminal act does not matter, as it is the agreement to carry into effect a criminal enterprise which comprises the offence and not the actions of the conspirators in actually carrying out the enterprise. It is clear that the appellants D2 to D5 admitted carrying out actions which individually facilitated the carrying into effect of the criminal agreement."

46.Mr Dunn argues that while these answers indicate that the 1st Appellant was aware that sometimes the cubes were made in advance, and of the reasons for doing that, there is nothing that indicates that this was as a result of any agreement between him and anyone else. In particular, in the whole of the 1st Appellant's interviews, there is no mention of him ever entering into any agreement with anyone over this matter. He says on a number of occasions that other people knew what was going on, but - says Mr Dunn - this is quite different from agreeing on what should be done.

47.Mr Dunn submits that it is clear from his answers in the second interview at item 408 '...every site was doing this way...' and in the third interview at items 28 and 32 '...everyone knew it' and 'it had already been so before I arrived', that the 1st Appellant did not enter into any agreement, he simply followed existing procedures. And that this is confirmed by the later answers (also in the third interview) at items 44 and 46 where, after being asked specifically if they had sat down and discussed it, the 1st Appellant replied:

"...later as I, I just said now, it had already been done when I arrived. Therefore then I, they did so, we followed them in what they did."

48.Further at items 72 and 74 he said:

"...Yes. Because basically everyone was . . . all site (sic) would be like this previously. Yeah the majority of sites are like this. And when I arrived here they were like this too. And I thought that... that is I did not realise that it was wrong."

49.And at items 86 and 88 the 1st Appellant said:

"...because I just followed what the technicians had been doing previously. They had been doing so and I followed suit."

50.In respect of the 2nd Appellant, Mr Dunn argues that the answer at item 46 in the 2nd interview simply outlines the practice and gives the reasons for it, without saying anything about any agreement. And, although the second set of answers could be interpreted as evidence of an agreement between the 2nd Appellant and the technicians, when the 2nd Appellant's subsequent questions and answers are examined it becomes clear that he started this practice when he first joined the company at the suggestion of his predecessor (item 96); that it became a common practice (item 102) and eventually everyone did it. In the entire set of interviews given by the 2nd Appellant, there is no mention of any discussion on the matter of cube-making with any of his co-defendants, and apart from the ambiguous answers given at items 80-90, there is no evidence of any agreement having been reached on this subject with them; they were simply following slack working practices that were already in place.

51.I do not agree, although the magistrate's finding, quoted above, is somewhat tautologous, it is clear he was saying that, although there might not have been an explicit agreement between the Appellants to carry out the practice of making additional sample cubes, there was a tacit agreement between them to do so, and the Appellants submitted themselves to that tacit agreement by positively adopting and carrying out that practice. This was a finding that he was fully entitled to make on the evidence.

Ground 2 - Dishonesty

52.Mr Dunn argues that the magistrate neither considered all the relevant facts, nor applied the test in R v Ghosh [1982] QB 1053 in concluding that the Appellants acted dishonestly.

53.Mr Dunn argues that in order to prove that the Appellants conspired to defraud the company, it must be proved that they acted dishonestly in the Ghosh sense. The only reference to dishonesty made by the magistrate in his statement of findings is at p.733, where he says no more than:

"...I was most certainly satisfied that the appellants...were dishonest in their criminal agreement"

54.Mr Dunn comments that there is no indication why he thought that to be so and no attempt to analyse the situation in terms of Ghosh.

55.He submits that the Appellants (and their co-Defendants) stood to gain nothing from their actions, they acted as they did largely as a result of their unit being undermanned and overworked and the magistrate acknowledged this fact at p.733 where he said:

"...the Appellants had acted...in order to able to carry out their duties. There was no question of financial gain."

56.Mr Dunn submits that it is by no means certain that their actions can be said to be objectively dishonest by the standards of ordinary reasonable people, and it certainly does not follow that the Appellants realised that what they were doing would be considered to be dishonest by others. In his third interview the 1st Appellant says at page 166, item 74:

"...I thought that...that is I did not realise that it was wrong."

57.In reply, Mr Stanley Chan for the Secretary for Justice, submitted that, although the magistrate did not specifically mention the Ghosh test in his statement of findings, it is clear that he bore it in mind when analyzing the evidence. At p.725 he made this finding:

"The appellants in interview all give details as to how the testing procedure was supposed to be carried out. They all demonstrated knowledge of the reasons for the procedure being as it was and acknowledged that to produce additional or surplus cubes was wrong."

58.And later on, also at p.725, the magistrate said:

"Accordingly, I was satisfied that, although there was no formal training for the appellants, the appellants each had a good and comprehensive understanding of the procedures they were supposed to follow, the reasons for those procedures and the importance of following those procedures correctly."

59.Mr Chan submits that making additional or surplus cubes knowingly in contravention of MateriaLab's requirements must be a dishonest act. He submits that it is not necessary for the magistrate to specifically refer to the leading authority on dishonesty in his statement of findings.

60.The English Court of Appeal in Ghosh held that a jury should be directed to determine whether the defendant was acting dishonestly in two stages:

1. The jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.

If it was dishonest by those standards, then the jury must consider the second question.

2. Whether the defendant himself must have realised that what he was doing was by [the standards of reasonable and honest people] dishonest.

61.The Court of Appeal in Ghosh gave further explanation of the second question, when it said at p. 1064:

"In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it. It will be obvious that the defendant himself knew that he was acting dishonestly. It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did. For example, Robin Hood or those ardent anti-vivisectionists who remove animals from vivisection laboratories are acting dishonestly, even though they may consider themselves to be morally justified in doing what they do, because they know that ordinary people would consider these actions to be dishonest."

62.In R v Roberts [1985] 84 Cr App R 117 the English Court of Appeal indicated that a full Ghosh direction would not be necessary unless the defendant raised the issue by, for example, suggesting that he did not know that anybody would regard his actions as dishonest.

63.In R v Price [1989] 90 Cr App R 409, the English Court of Appeal, following Roberts, said at p. 411:

"...it is by no means in every case involving dishonesty that a Ghosh direction is necessary. Indeed in the majority of such cases, of which this was one, it is unnecessary and potentially misleading to give such a direction. It need only be given in cases where the defendant might have believed that what he is alleged to have done was in accordance with the ordinary person's idea of honesty."

64.In many cases the meaning of dishonesty provided by the English Court of Appeal in Ghosh has been held to be applicable in Hong Kong and it is clear that the meaning applies to 'dishonesty' wherever it appears in the Theft Ordinance and in other contexts, including conspiracy to defraud.

65.I can see no error on the magistrate's part. I am sure that all reasonable and honest people would regard an agreement to misrepresent the source of the sample concrete cubes as a dishonest one. Only the 1st Appellant claimed not to have been aware that what he agreed to do was wrong and that was in his third interview. He did not raise this claim at trial by electing to give evidence, he therefore avoided cross-examination; it remained a bare untested exculpatory statement of little or no weight.

66.The authorities make it clear that even in jury trials it is often unnecessary to direct the jury in accordance with Ghosh. The Court of Appeal reiterated this as recently as May of this year in HKSAR v Cheung Wai-chun CA 258 of 2000 (unreported). The magistrate who conducted this trial is an experienced and well-respected professional judge; it is unrealistic to believe that he is unaware of the Ghosh test and that he failed to apply it. It is certainly not necessary for him to set it out in his statement of findings as if it was a sacred mantra.

Ground Two - Intent

67.Mr Dunn argues that that the Appellants had no intent to defraud, namely, to cause loss or economic harm to MateriaLab.

68.He argues that the magistrate erred in considering the matter of intent solely from an objective viewpoint. That he considered the actions of the Appellants, envisaged a worst-case scenario, and then looked at the evidence concerning the possible adverse results to MateriaLab's economic interests as if these had actually happened. From this he concluded that the Appellant's actions had placed MateriaLab's economic interests at risk. He failed to consider the matter subjectively: that is did the Appellants foresee or realize that their actions would have that effect.

69.What the magistrate said, at p.733, was this:

"In the present case, PW1 gave evidence that the failure to abide by the standards imposed by the Housing Department could lead to MateriaLab failing to win particular contracts from that department in future. MateriaLab could even be excluded from tendering for such contracts. There was also the expenditure of money in the investigation into whether sub-standard concrete had in fact been used in the construction of structures...As to the defendants themselves, I was most certainly satisfied that the appellants, D2, D3, D4 and D5 were dishonest in their criminal agreement."

70.Mr Dunn says that the editors of Archbold 2001 ed. at paragraph 17-37 (p.1594) in discussing the matter of specific intent in criminal cases, state that the approach of the Court in all cases should be exactly as in murder. And that this is supported by R v McPherson & Watts [1985] CLR 508 and the commentary thereto by Professor Sir John Smith QC in which he said at p.509:

"The dicta in the present case confirm the view that there is a sufficient intent to defraud X if the defendant knows that X will inevitably be defrauded if the plan is successfully carried out. Lawton LJ said '...the probability is that a jury would have concluded that both these appellants appreciated that what they did and what they were planning to do would inevitably and directly defraud the English banks. Notwithstanding the references to the object of the conspiracy, it is submitted that it is not necessary to prove the defendant's object was to defraud. The object of conspirators is almost invariably to make a profit for themselves; but, because they know that the inevitable consequence of making a profit will be the causation of a loss to another, they intend to defraud that other. The right test it is submitted is that laid down by the House of Lords in Moloney."

71.In 1985 when Professor Smith penned those words, R v Moloney [1985] AC 905 was the leading case on intent in murder. It has now been overruled by R v Woollin [1999] 1 AC 82, in which the House of Lords held that the jury are not entitled to infer the defendant's intent from the foresight of the consequences of his acts unless those consequences are a 'virtual certainty'.

72.Mr Dunn argues, that if the magistrate had considered the matter, given their lowly position in the hierarchy of the company and their lack of training, it is most unlikely that he would have come to the conclusion that the Appellants foresaw as a 'virtual certainty' that their actions would endanger MateriaLab's economic interests.

73.Ingenious though that argument is, it ignores two matters. First, the citation in Archbold at paragraph 17-37 on which Mr Dunn relies is not as all-embracing as he contends, what the relevant part of the paragraph in fact says is:

"As a general proposition, it is submitted that wherever the definition of an offence requires proof of a specific intent, the approach of the court should be exactly as in murder...(reference, should, however, be made to the treatment of particular offences for consideration of any authorities concerning the application of these principles to those offences)." (emphasis added)

74.The Privy Council in Wai Yu-tsang, at p.279, doubted whether an authority on the mental element in the crime of murder threw much light on the nature of conspiracy to defraud. It appears clear that the question of intent in the offence of conspiracy to defraud is a discrete area of the criminal law.

75.Secondly, as I hope I have demonstrated earlier in this judgment, it ignores the fact that authority establishes that the expression 'intent to defraud' is not to be given a narrow meaning, involving just an intention to cause economic loss to another.

76.The Appellants had no right to make additional or surplus cubes that were not in accordance with the required specification. Such a fraudulent practice could prejudice or injure MateriaLab, their employer's, rights. As the magistrate observed at p.723, it broke the link between the cube and the location where the concrete from which it had been cast was used in construction work. If the cube were found to be sub-standard, it would be impossible for the contractors to identify the potentially substandard parts of the works. That not only put MateriaLab's interests at risk, it also put the potential owners and occupants of the building at risk, both physically and economically.

77.I agree with Mr Dunn that the Appellants' object was to make their work easier to perform and to enable them to leave work early and that they had no desire to imperil MateriaLab's rights. But this is not an unusual situation in cases of conspiracy to defraud. In R v Allsop [1977] 64 Cr App R 29 the defendant was a sub-broker for a hire-purchase company. Acting in collusion with others, he entered false particulars in forms submitted to the company, this was done to induce it to accept applications for hire-purchase facilities, which it might otherwise have rejected. The defendant both expected and believed that the transactions in question would be completed satisfactorily and that the company would achieve its contemplated profit, as it appears in fact to have done. What the defendant sought to achieve was an increase in the company's business and therefore of his own commission. He was charged with conspiracy to defraud. The judge directed the jury that they must be sure that the conspirators knew that they were inducing the company to act in circumstances in which they might cause or create the likelihood of economic loss or prejudice. The jury convicted the defendant. He appealed on the ground that the judge's direction was too wide; he should, it was submitted, have directed the jury that they must be sure that the defendant intended to cause economic loss to the company. The English Court of Appeal dismissed the appeal, Shaw LJ said at p.31:

"...(counsel's) argument traversed the shadowy region between intent and motive. Generally the primary objective of fraudsmen is to advantage themselves. The detriment that results to their victims is secondary to that purpose and incidental. It is 'intended' only in the sense that it is a contemplated outcome of the fraud that is perpetrated. If the deceit which is employed imperils the economic interest of the person deceived, this is sufficient to constitute fraud even though in the event no actual loss is suffered and notwithstanding that the deceiver did not desire to bring about an actual loss."

78.In reaching this conclusion, the Court of Appeal found it necessary to reconcile it with the narrow definition of conspiracy to defraud expressed in Lord Diplock's speech in Scott, which was doubted by the Privy Council in Wai Yu-tsang. They did this on the basis that 'economic loss', may be

'...ephemeral and not lasting, or potential and not actual; but even a threat of financial prejudice while it exists may be measured in terms of money'.

79.The Privy Council in Wai Yu-tsang approved the Court of Appeal's decision in Allsop, at p.278, they said:

"It is however important in such a case, as the Court of Appeal stressed in R ν Allsop, to distinguish a conspirator's intention (or immediate purpose) dishonestly to bring about such a state of affairs from his motive (or underlying purpose). The latter may be benign to the extent that he does not wish the victim or potential victim to suffer harm; but the mere fact that it is benign will not of itself prevent the agreement from constituting a conspiracy to defraud."

80.In this case the Appellants were experienced technicians, as such they must have been aware of, or at least able to appreciate or foresee, the possible harm that could be caused to MateriaLab as a result of their dishonest agreement to misrepresent the source of the test cubes. Notwithstanding what their motive was, the magistrate was entitled to infer that they intended that harm in the sense that it must have been a contemplated outcome of their dishonest agreement.

81.The convictions are neither unsafe nor unsatisfactory and the Appellants' appeals against conviction are dismissed.

Representation:

Mr Stanley Chan, SADPP (Ag) leading Mr Gary Lam, GC, for the Respondent

Mr John Dunn, instructed by Messrs Louis K Y Pan & Co, for the 1st and 2nd Appellants

3rd Appellant Choi Kim-kwan in person